“Once more unto the breach” goes the rallying call from my Union Reps as we prepare to strike on May 10 2012. Following up the N30 strike on public sector pensions which I have written about previously on this blog, I issued an alternative rallying call – to get round the table and negotiate. But unsurprisingly ignored.

I find myself weirdly ambivalent this time. I shouldn’t be. It is fundamentally about funding my life throughout retirement and yet, the approach taken by the union since the previous strike does not do anybody any favours.

The three tests for me are: Do we have a clear unambiguous rationale for striking at this time? Did the union do everything it could to avoid striking? Are we striking as a last resort?

The answer is no in all cases. Although this action is part of the same mandate as the June 2011, we have had any numbers of “final offers”. The latest of which came in the middle of a consultation ballot on whether to continue with the campaign. The ballot asked a question of such ambiguity that when I talked to other members about it, the question could not be recalled easily. In fact, attempting to find out the actual word for word question (as opposed to a summary of the question) has proved rather difficult. For a union that prides itself on its democratic structures, this is disappointing. There was enough significant change between June and the final offer for it to be worth putting a clear question along the lines of “Do you accept or reject the government’s offer on the pension scheme”. This never happened.

Mark Serwotka’s response to Francis Maude on Newsnight on November 30 was reminiscent of Charles De Gaulle and his Non. This was the resigning issue for me. I wrote that Mark was “dismissive and negative… shows bad faith… we are in danger of missing the boat here and ending up with a deal that could be imposed and worse.”

With the inclusion of the reforms in the Queen’s Speech, the fear that I expressed all these months ago have come true. The leadership could have spent all that time getting changes like the teachers did. Instead, the behaviour of the union led to the PCS being kicked out of negotiations before being reinstated. This does not feel to me like behaviour of a union out to get the best possible deal for members but to block.

The days of 70s militancy went with Wapping and Thatcher’s confrontation with the miners. A strike of the last resort suggests when all else fails, when all the negotiation, conversations, backroom deals fails, then we go out.

We ballotted and took action pre-emptively, in the middle of negotiations causing problems for both sides. The government determined to treat this as a re-run of the miners in 1984 and a union implacably ideologically opposed to the government.

For the first time in my working life. I will cross a picket line.

* The author has been a Lib Dem member since 1995 and a PCS member since 2001. He writes in a personal capacity.

I must say I see both sides as being at fault and do wonder whether both want a confrontation. The unions side you have summarised above and the government are no better. They keep saying that the final offer has been made effectively saying any negotiations would be futile….

I think public sector pensions poses a major political problem for Liberal Democrats, and to a lesser extent the Labour Party, but much less of a problem for the Conservatives. It is all very well public sector union leaders saying, as indeed did Hutton, that they do not want a race to the bottom, but the reality is that those who work in the private sector have over the past decade seen their future pension benefits drastically cut. Even where firms are making substantial contributions to new money purchase pension schemes this represents a significant reduction in future pension benefits. In these circumstances many voters working in the private sector, whether in a pension scheme or not, will have little sympathy with public sector claims. However under Labour public sector employment, particularly outside London and the South East, dramatically increased in terms of its contribution to local economies. Those working in the public sector are quite naturally unwilling to see their pension benefits cut to the same extent as has happened in the private sector. Like bankers, they see no reason why they should suffer the same reductions in standard of living that most private sector workers have had to endure. While in the private sector many workers have been willing to take pay cuts to avoid redundancies, and found pension contributions increasing and benefits falling just to preserve some sort of pension scheme, there seems little enthusiasm for this approach among public sector unions. The result is that any government that tries to tackle this issue will see a collapse in electoral support from those working in the public sector. As part of the Government, the Liberal Democrats, who in the past couple of decades have probably garnered significantly more votes from those working in the public sector than the Tories, are inevitably the bigger loser. The unions claim that the existing public sector pension benefits are affordable, but the local government schemes, which like private sector schemes invest real money in real investments, demonstrate, there is a clear choice between the level of service local councils are able to provide, and how much they spend on workers’ pay and benefits. It really is a zero sum game.

“In these circumstances many voters working in the private sector, whether in a pension scheme or not, will have little sympathy with public sector claims.”

I can see where you’re coming from there. When something bad happens to me, it makes me feel so much better to see something bad happen to someone else as well.

I think what’s needed here is a long, hard, rational look at how affordable pensions are in the long run. The gap between public and (most*) private pension provision is of course a concern but it seems to have escaped everybody’s notice that there are TWO ways of closing the gap – you can make private provision better, as well as making public provision worse. If the status quo is genuinely unaffordable (whatever that means) then people need to be consulted about how they would like to see the system reformed – there are several ways of approaching this.

In short, we need a much more scientific and consultative approach to this whole issue, that looks at private as well as public pensions. All we’re getting from the government is endless public v private divide-and-rule rhetoric, and imposition of reform without proper consultation or hard sums to back up what they are doing. It’s a shabby way of handling such an important issue.

* Though it’s common to hear people blandly state that private sector pensions have all gone to the wall, in fact there are still many private sector workers with excellent pensions. The problem is not so much the quality of the private schemes as the availability and take-up.

Most of the data on the provision of pensions is already on record. See, for instance, this link: http://www.bbc.co.uk/news/business-15925017. There are now very few private sector schemes which offer benefits, particularly to new employees, which are in any way comparable to what will be available in the public sector even after the Government’s proposed changes, Though there remain some reasonably good private sector schemes, they can scarcely be described as “excellent”, Moreover, a recent report from the Pensions Policy Institute suggests that the number of people in private sector final salary schemes will drop below 1 million within eight years; in the 1960s more than 8 million workers were in such schemes. Indeed, of the 29 million people now employed in the private sector only 3.2 million are in a scheme which includes any employer contributions. Auto-enrolment into NEST will probably improve the take-up, but it is generally accepted that the benefits which will come out of NEST will be pretty pathetic unless the Government forces employers and employers to contribute substantially more than is currently anticipated, and this is politically impossible. The reality of the situation is that for a whole variety of reasons private sector pension benefits have been steadily reduced over the past 10 to 15 years and there is no way that the clock can be turned back. Moreover, given the fact that private sector pensions are ultimately paid out of investments in private sector companies, there really is no way in which the situation can be improved, unless employees are prepared to pay substantially more in contributions. On the other hand public sector pensions are paid out of the taxes of everyone. This simply isn’t fair.

The whole issue of 2nd pensions which is what we are ultimately talking about needs reviewing. If we accept that every individual must have more than the State Pension to rely on then the whole mechanics of seondary pensions needs reviewing. This means whether you work in the Public or Private Sector the second pension must provides a decent pension pot at the end of the working life of the employee. AVC’s should be permitted to top up your pension fund even if you have left the employment of the original employer you took the Pension out with. Perhaps we also need to look at the idea that when your pension reaches the point you would normally be looking to convert your pension contributions into an annuity the individual employee would have the choice as to how that money could be invested to maximise their pension pot.
Fundamentally we must look at the relationship between pension contributions (from whatever source they come from, and how much is realistic to invest in it), the cost of providing the pension (all pensions including the Civil Service Pension should be managed by a Pension Fund which cannot make a loss, and has a reducing contribution from Central Govt) and the minimum amount the second pension has to provide to make all pensioners retirement a reasonably comfortable one.
The issue of Private vrs Public Pension Schemes by removing any unfair advantages one has over the other, whilst not seeking to achieve the lowest common denominator will eventually make the argument of one being much better than the other redundant. However if the finances of 2nd Pensions cannot be made to work then perhaps we will need to seriously look at whether pensions are not the best and only way of putting money aside for our old age. However of the alternatives that could be available the current thinking of investing money into property in the traditional way is not an alternative I would support given our current Housing shortage/crisis.

Liberal Democrat MP and Minister for Pensions Steve Webb has revealed that the government is looking at a new “defined ambition” style of pensions, which would offer a better balance of risk between employer and employee.

Currently, money purchase schemes put the risk on the employee (poor investment returns or a market crash means they get a lower pension) and final salary schemes, quickly going out of fashion, put the risk on the employer (poor investment returns or a market crash means they have to put more money in).

Instead, Webb is talking of a new type of scheme where the size of the cash pot on retirement is guaranteed, but the size of pension that it then purchases is not, so splitting the risks:The Pensions Crisis

Firms would like to offer their employees some sort of certainty but without all the costs and burden they already face.

Radicaliberal is right in saying that the key issue is how a pension over and above the basic state pension is provided. Currently members of public sector schemes bear no risk, because the state will always bale out a public sector scheme by raising taxes, whereas members of private sector schemes bear either the risk that the investments in their money purchase scheme will under-perform and annuity rates deteriorate, or, if they are still fortunate enough to be in a private sector final salary scheme, that their employer will still be around, and is profitable enough, to finance any deficit that the scheme develops. Steve Webb’s proposal is simply a way of reducing the risk that those in money purchase schemes experience, by transferring some of the risk back to the employer. It will not change the fundamental unfairness between private sector schemes and public sector schemes. In fact the only way of doing this would be for the State to guarantee a minimum level of pension for everyone, say say half the average national wage, and then leave it up to individual employees, in both the public and private sectors, to decide whether they want to top up their state pension by additional contributions invested in a money purchase scheme. This is essentially what happens in most of continental Europe (though pensions do tend to still be income related – like the old SERPS which is now being abandoned by the Government.) However no political party in the UK is willing to go down this route because, like public sector pensions, it is in effect transferring the risk to future generations, and with a falling ratio of workers to pensioners this is considered unacceptable.

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